1. Chapter 1 Why Information Systems Matter www.pearsoned.ca/jessup
Robert Riordan, Carleton University

2. Learning Objectives
1. Define and understand the term Information Systems (IS)
2. Explain the technology, people, and organizational components of Information Systems
3. Describe the types of jobs and career opportunities in Information Systems and related fields

3. Learning Objectives
4. Describe the various types of Information Systems (IS)
Describe the dual nature of Information Systems in the success and future of modern organizations
6. Understand and plan for the future of managing IS

4. The Purpose of Information Systems
Businesses use information systems
To make sound decisions
To solve problems
Problem is any undesirable situation
Decision arises when more than one solution to problem exists

5. The Purpose of Information Systems (continued)
Problem solving and decision making require information
Keys to success in business are
Gathering correct information
Storing information
Using information

6. Data, Information, and Information Systems
“Data”, “information” and “system” are commonly used terms
Important to understand their similarities and differences

7. Information: facts or conclusions that have meaning within context
Data vs. Information
Data: a given or fact
Derived from the Latin word datum, meaning a given fact.
Can be number, statement, or picture
Information: facts or conclusions that have meaning within context
Composed of data that is manipulated

8. Data is manipulated to make useful information
Data Manipulation
Data is manipulated to make useful information
Survey is common method of collecting data
Raw data is hard to read
Information is more useful to business than data

9. Generating Information
A process is manipulation of data
Process usually produces information
Process may produce more data
A piece of information in one context may be considered data in another context

10. Generating Information (continued)
Figure 1.1: Input-process-output

11. Information in Context
Not all information is useful
Useful information is
Relevant
Complete
Accurate

12. Information in Context (continued)
Useful information is
Current
Obtained economically (in business)

13. Information in Context (continued)
Figure 1.2: Characteristics of useful information

14. What Is a System?
System: array of components that work together to achieve goal or goals
System
Accepts input
Processes input
Produces output

15. What is a system? (continued)
System may have multiple goals
System may contain subsystems
Subsystems have sub-goals that meet main goal
Subsystems transfer output to other subsystems

16. What is a system? (continued)
Closed system: has no connections with other systems
Open system: interfaces and interacts with other systems
Often a subsystem of a bigger system
Information system: processes data and produces information

17. Information and Managers
Systems thinking: thinking of an organization in terms of subsystems
Database: collection of electronic records
Information systems automate exchange among subsystems
Information map: network of information systems
Information technology: technologies that facilitate construction and maintenance of information systems

18. The Benefits of Human-Computer Synergy
Humans are relatively slow and make mistakes
Computers cannot make decisions
Synergy: combining resources to produce greater output

19. The Benefits of Human-Computer Synergy (Continued)
Figure 1.4: Qualities of humans and computers that contribute to synergy

20. Information Systems in Organizations
Computer-based Information system: system with computer at center
Certain trends have made information systems important in business
Organizations lag behind if they do not use information systems

21. Components of information systems
Figure 1.5: Components of an information system

22. What are Information Systems?
- A combination of technical components
- Built and used by people to collect, create, and distribute useful data
- Used typically in organizational settings but are evolving for personal use

23. Information Systems Components: Data
Hardware
Telecommunications
People
Data
Software
The raw inputs for entry into information systems
Organized, processed and stored by an IS to support user information needs
Provides basis for qualitative/quantitative analysis

24. Information Systems Components: Hardware
Telecommunications
People
Data
Software
The physical components of information systems
Hardware components include processors, input and output devices, and storage devices (Pentium 4)
Typical configurations based on application include micro, mid-range, mainframe, and supercomputers

25. Information Systems Components: Software
Hardware
Telecommunications
People
Data
Software
The instructions that operate the information system
System software controls the hardware (e.g. Windows XP)
Application software allows users to perform specific tasks to increase productivity (e.g. MS Word)

26. Information Systems Components: Telecommunications
Hardware
Telecommunications
People
Data
Software
The communication mechanism of information systems
Allows two or more computers to communicate (Internet)
Utilizes standard protocols for IS communication

27. Information Society Evolution: Periods of Change
Agricultural
Industrial
Informational
(Prior to 1890’s)
(1890’s to 1960’s)
(1960’s to Present)

28. Information Society Evolution: Terms and Issues
1960
2000
Knowledge Worker (Peter Drucker 1959)
A term invented to describe a future trend in the workforce
These will be professionals that create, modify and/or synthesize information as a fundamental part of their job
They will require higher education levels and received higher compensation than workers in agriculture or manufacturing
The term is still generally accepted today (Drucker was right!)

29. Information Society Evolution: Terms and Issues
1960
2000
Knowledge Society (Drucker )
Term invented to describe the next evolution of society
This evolution would be a result of the rise in the numbers and importance of knowledge workers in society
Education was described as the cornerstone of the knowledge society as it is core of the knowledge worker
Drucker was right again!

30. Information Society Evolution: Terms and Issues
1960
2000
New Economy (Wired Magazine - Late 1990s)
Similar to “knowledge society” but more descriptive
Describes a society where people use their brains more than their hands in their work and personal lives
Where communications technology and other IT systems will create global competition for all products and services
Other names: Digital Economy, Network Era, Internet Era

31. The New Economy (NE): Societal Perspectives
Perspective 1: Sims –Taylor
The new economy creates risks for Knowledge Workers
Knowledge workers will be the first to be replaced by automation with information technology
Perspective 2: Rikfin
The over reliance on information technology has caused society to act hastily
The result has been a loss of perspective
Perspective 3: THE DIGITAL DIVIDE
Those with access to information technology have great advantages over those that don’t
IT access will further polarize society

32. Forms of Technology
Technology – any mechanical and/or electrical means to supplement, extend, or replace human manual operations Examples: building heating/cooling systems, car brakes, etc.
Information Technology – any machine technology that is controlled by or uses information for operation
Example: a programmable industrial robot receiving instructions from a computer-based database
Computer- based Information Systems – any computer-based technology that provides information for use by persons or machines to make decisions or control processes Example: Software that controls CD burning hardware

33. Information Systems: Turn Data into Information
Raw material
Unformatted information
Generally has no context
Processed material
Formatted information
Data given context
Individual time cards for factory workers entered into the payroll system
Examples
Department Labour Report,
Project Status Report, Employee Payroll Checks

34. Information and Communication Technology Firms in Canada

35. Three Distinct Competencies of IS Professionals
Technical
Knowledge of hardware, software, networking, and security
Most IS professionals are not deep technical experts but can direct/manage others with the required technical skills
Business
Understand the nature of business including process, management, social, and communication domains
Unique skills over those with only technical skills
Systems
Knowledge of approaches and methods, also possess critical thinking and problem solving skills necessary to build and integrate large information systems
Unique skills over those with only technical skills

36. IS Impact on Organizations: New Opportunities
CRA creates a website and allows NETFILE
Current CRA Tasks
New
Website
Modified CRA Tasks
Post Office
Stock Forms & Publications
Post Office
Minimal Stocking of Forms/Pubs
CRA Office
Mail Forms/Publications
Enter Tax Returns in System
Conduct Audits
CRA Office
Minimal Mailing Forms/Pubs
Reduced Entry of Tax Returns
Conduct Audits (MORE!)
CRA Hotline
Answer FAQs
Resolve Problems
IRS Hotline
Reduced Answering FAQs
Resolve Problems
Activate
NETFILE
Implementation Results
Reduced labour costs in forms distribution, hotline support, data entry from access to info/materials on the website and NETFILE
Allow for redeployment of resources to primary activities including conducting audits and resolving problems

37. Levels of the Organization and Traditional Systems
Executive Information Systems
Decision Support Systems (both levels)
Management Information Systems
Transaction Processing Systems
Expert Systems
Functional Area Information Systems
(Across all levels within a function)

38. Traditional Information System Functions
Transaction
Processing Systems
Management
Information Systems
Executive
Decision Support
Systems
Expert Systems
Functional Area
Process day-to-day business event data
in an organization (Operational level)
Produce detailed information to help manage a firm or part of a firm (Managerial)
Provide very high-level, aggregate information
to support decisions (Executive)
Provide analysis tools and databases to support quantitative decision making (Multiple)
Mimic human expert in a particular area and provide answers or advice (Operational)
Support the activities within a specific functional area of the firm (All)

39. Other Information Systems - Not as Easy to Categorize
Office Automation System
Collaboration
System
Customer Relationship Management
Electronic
Commerce
Enterprise Resource
Planning System
Support a wide range of predefined, daily work activities of individuals or groups (e.g. MS Word)
Enable people to communicate, collaborate, and coordinate with each other (e.g. )
Support the interaction between the firm and its customers (e.g. sales force automation or call center technology)
Enable customers to buy goods and services
from a firm’s website. (
Support and integrate all facets of the business (e.g. planning, manufacturing, sales, etc.)

40. Many types of information systems
From Recording Transactions to Providing Expertise: Types of Information Systems
Many types of information systems
Capabilities of applications have been combined and merged
Management Information System: supports planning, control, and making decisions

41. Transaction Processing Systems
Most widely used type of system
Records data collected at point where organization interacts with other parties
Encompasses cash registers, ATMs and purchase order systems

42. Supply Chain Management Systems
Supply chain: sequence of activities involved in producing products
Activities include marketing, purchasing raw materials, manufacturing, shipping, billing, collection, and after-sale services
Also known as enterprise resource planning systems

43. Customer Relationship Management Systems
Customer relationship management: managing relations with customers
Used in combination with telephones to provide customer service
Often linked to Web applications that track online transactions

44. Business Intelligence Systems
Business Intelligence: gather data to help organization compete
Often contains statistical models
Access large pools of data
Data warehouse: large database that usually store transactional records

45. Decision Support and Expert Systems
Decision support system: supports decision-making
Relies on models to produce tables
Extrapolates data to predict outcomes
Expert system: supports knowledge-intensive decision-making
Uses artificial intelligence

46. Geographic Information Systems
Geographic information system: ties data to physical locations
Represents data on a map in different formats
May reflect demographic information in addition to geographic
May use information from GPS satellites

47. Geographic Information Systems (continued)

48. Information Systems in Business Functions
Functional business area: services within a company that support main business
Includes accounting, finance, marketing, and human resources
Part of a larger enterprise system

49. Information systems help record transactions
Accounting
Information systems help record transactions
Produce periodic statements
Create required reports for law
Create supplemental reports for managers

50. Finance
Finance systems facilitate financial planning and business transactions
Tasks include organizing budgets, managing cash flow, analyzing investments, and making decisions

51. Pinpoint likely customers and promote products
Marketing
Pinpoint likely customers and promote products
Marketing information systems analyze demand for products in regions and demographic groups
Identify trends in demand for products/services
Web provides opportunity to collect marketing data

52. Human resource management systems aid record-keeping
Human Resources
Human resource management systems aid record-keeping
Must keep accurate records
Aids recruiting, selection, placement, and reward analysis
Performance evaluation systems provide grading utilities

53. Web Empowered Enterprises
E-commerce: Buying and selling goods and services through Internet
Internet is a vast network of computers connected globally
Web has a profound impact on information systems

54. IS Competitive Advantage Perspectives: Who is Right?
“IT Doesn’t Matter” - Carr 2003
As IT becomes more pervasive, technology becomes more standardized and ubiquitous
The result is that the same technologies are available to all competitors in an industry
This produces no competitive advantage
“The Engine that Drives Success: The Best Companies have the Models Because they Have the Best IT Strategies” - Lundberg 2004
Companies with bad business models fail regardless of IT systems or other capabilities
Companies with good business models use IT to execute successful business models and succeed

55. IS for Competitive Advantage: Business Value
Using IS to create/support business strategy is the most effective approach creating the most business value
Strategic IS systems are typically custom built and are integrated to support the business strategy
Strategic IS systems are by nature hard to replicate just as are good business models

56. Competitive Advantage: Dual Nature of Systems
FedEx Customer Website
versus
Denver International Airport Baggage System
IS that works
(FedEx)
IS gone wrong
(DIA)
Evaluation Factors
Strategic in Nature
Established Technology
Capable Suppliers
Structured Implementation
Capable IS Support
Yes
Yes No ??

57. Organizational IT Roles
Central IT Organization
Responsible for IT Planning
Coordinates implementations
Establishes organization’s IT methods and standards
IT Business Unit Support
Liaison between Central IT and the Business Unit
Spends much time onsite at the Business Unit
Reports to both orgs
Business Unit
Responsible for determining IS business requirements
Supply budget and personal resources for implementations

58. Executive Roles in Information Technology
Manages External
Stakeholder Relationships
Sets Strategic Direction
Defines High Level IT
Needs for the Future
CEO
Chief Executive
Officer
COO
Chief Operations
Officer
CFO
Chief Financial
Officer
CIO
Chief Information
Officer
Manages Operations
Allocates Resources
Primary Consumer of IT within the Organization
Manages Accounting & Finance
Forecasts Needs and Secures Financial Resources
Allocates Budget for IT Expenditures

59. Executive Roles in Information Technology
CEO
Chief Executive
Officer
COO
Chief Operations
Officer
CFO
Chief Financial
Officer
CIO
Chief Information
Officer
Manages IT Organization and Operations
Forecasts IT Needs from Business Strategy
Sets Direction for IT Architecture and Organization
Plans, Designs and Delivers IT throughout the firm

60. The Future of Information Systems: Trends
Ownership and Control (Old School IS)
Large backlogs of user requests…very poor service
Arrogance and feeling of ownership and control of IT
Can’t do attitude…told users why they couldn’t do things
Resulted in a very poor relationship with users T H E N
Business managers became technology savvy
Systems evolved and became easier to develop
Business organizations developed their own systems
Consulting and Service Mentality (New School IS)
IS is taking on an IT consulting role
“Service Mentality”…users are customers to be served
Proactively support and problem solve for their customers
Fundamentally believe that customers own the technology

61. IS Role in Change: Trends and Terms
Downsizing (Sometimes called Rightsizing)
Reducing organizational headcount to meet the financial goals of the organization
IS is viewed as the lever to provide the systems necessary to increase productivity
Outsourcing
Transferring business functions outside the organization to increase service levels and/or reduce operating cost
IS is not immune to this trend. Certain commodity IS technical jobs will be increasingly transferred overseas
IS must find better methods to manage offshore work

62. The Future for IS
IS needs will continue to grow as technology developments advance
Although outsourcing will continue, there will be strong demand for IS professionals
There is a need for personnel that can speak the language of technology and business and the skills to manage projects and people
Characteristics for success include: continuous learning and growth, finding new ways to add value, flexibility, and developing unique skills